A Medical Device Daily
The law firm of Schiffrin & Barroway (Radnor, Pennsylvania) has filed a class-action lawsuit in the U.S. District Court for the Northern District of California on behalf of all securities purchasers of FoxHollow Technologies (Redwood City, California) from May 13, 2005, through Jan. 26, 2006.
The complaint charges FoxHollow and certain of its officers and directors with violations of the Securities Exchange Act of 1934, alleging that the company failed to disclose and misrepresented the several material adverse facts that were known to defendants or “recklessly disregarded” them.
The complaint lists the adverse facts as 1) that Foxhollow's board chairman, defendant John Simpson, directed company management to enter into related-party transactions with Lumend, a company which Simpson founded and served as chairman; and 2) that Simpson caused the company to terminate certain senior management members who refused to follow Simpson's directives.
According to the filing, on Dec. 12, 2005, FoxHollow “shocked” investors when it announced that President and CEO Robert Thomas had informed the board of directors that he would be retiring effective Jan. 1, 2006 (Medical Device Daily, Dec. 16, 2005).
The law firm said, “On this news, shares of FoxHollow plummeted $7.15, or 15.5%, to close on Dec. 13 at $38.97 a share.
On Jan. 26, FoxHollow said that William Hoffman had resigned as vice president of sales effective Feb. 1 and that David Martin, chief operating officer, would be leaving the company on or before March 31. “On this news, shares of FoxHollow shed an additional $0.69, or 2.7%, to close on Jan. 27 at $24.75 per share,” according to the filing.
FoxHollow has developed the SilverHawk Plaque Excision System, a minimally invasive method of removing obstructive plaque and restoring blood flow to the legs and feet.